Archive for: Polish Act on Combating Unfair Commercial Practices

Eller Service s.c., the owner of hosting service available at pobieraczek.pl, was sending to its customers misleading information in order to intimidate them and persuade to pay for serviced they did not directly order. The President of the Office of Competition and Consumer Protection decided that the clients of the website pobieraczek.pl received messages suggesting a criminal offence. Meanwhile, only a court issuing the judgment, may determine whether a crime was committed. An entrepreneur can not intimidate its consumers. Even the hypothetical suggestion that there will be filed a complaint or a private suit, is against the law. Entrepreneurs cannot intimidate consumers in order to force them to make their payments, and cannot lead consumers into legal confusion. The President of the OCCP ordered the company to pay a penalty of more than 215 thousand PLN. Eller Service filed a complaint against this decision.

The Court of Competition and Consumer Protection in its judgment of 13 December 2013 case file XVII AmA 76/12 upheld that decision. The judgment is not final.

The concept of “average consumer” is present in intellectual property law and the law of unfair competition from a long time. Since the Dassonville case (C-8/74), the concept of the average consumer has been developed in the case law of the Court of Justice of the European Union, and appeared in the preamble to Directive 2005/29 on unfair commercial practices. According to the Polish Act of 23 August 2007 on combating unfair commercial practices, the average consumer is understood as a consumer who is adequately informed, attentive and careful. The assessment should be made with account taken of social, cultural, linguistic factors and the belonging of the particular consumer to a specific consumer group, which should be understood as a consumer group that can be unambiguously identified and is particularly receptive to the influence of a commercial practice or the product to which the commercial practice applies, due to its specific characteristics, such as age, physical or mental disability. However, it looks like some Polish courts do not think that an average Polish consumer fits the established rules and standards.

The Appeallate Court in Warsaw in its judgment of 13 January 2013 case file VI ACa 1069/12 held that the average Pole, which is also the average consumer, mainly due to social and cultural backgrounds, has a low legal awareness. This is the view shared by the Polish legal community. The standard of an average Polish consumer cannot in any way related to the standard of the average consumer in Western Europe, which for many decades is subjected to intensive consumer education.

Eller Service s.c., the owner of hosting service available at pobieraczek.pl website advertised its business using slogans suggesting that the hosting and downloading of different files (mostly copyrighted material) is free. Advertising banners displayed “10 days to download for free” and “Yes, I want to test for 10 days”. However, users who wanted to host or to download files had first to register on the site, giving their name, address, date of birth and e-mail. The requirement was also to accept of the Terms of Service. The user registration date was also the first day of consideration of the contract which was concluded even for a year. In addition, the payment was charged from day one, and not, as the advertising slogans suggested after 10 days.

Article 4
1. A commercial practice used by a trader in relations with consumers shall be unfair whenever it is contrary to good customs and significantly distorts, or may distort, the economic behavior of the average consumer prior to, during or after the conclusion of a product contract.
2. In particular, a commercial practice shall be regarded as unfair whenever it is misleading or aggressive and whenever a code of conduct is used that is contrary to law, if such activities meet the conditions set forth in section 1 above.

Article 5
1. A commercial practice shall be regarded as a misleading action if, in any way, it causes, or may cause, an average consumer to take a transactional decision, which he/she would not have otherwise taken.

The President of the Office of Competition and Consumer Protection, Wrocław Delegacy, in a decision of 31 March 2010, no. RWR 61-23/09/ZK, ruled that Eller Service s.c. was involved in practice infringing collective consumer interests. The President imposed a fine of up to 119.570 PLN paid into the state budget on each of the two partners of a civil partnership who runs the questioned business activity.

Eller Service s.c. filed a complaint against this decision but it was dismissed by the Court of Competition and Consumer Protection in its judgment of 27 February 2012 case file XVII AmA 192/10. The Appeallate Court in Warsaw in its judgment of 27 March 2013 dismissed the appeal.

I. The Law
The main sources of binding laws in the Republic of Poland are the Constitution of 2 April 1997, acts passed by the Parliament, ratified international treaties and regulations issued, for example, by the Prime Minister or the Council of Ministers – Polish government. Regulations are issued for the purpose of implementation of acts.

Act of the Protection of Certain Consumer Rights and on the Liability for damage caused by a dangerous product – PCCR – (in Polish: ), published in Journal of Laws (Dziennik Ustaw) of 31 March 2000, No. 22 , item 271.

Act on Protection of the Purchasers of the Right to use a building or residential unit for a specified time each year and on amendment to the Civil Code, Code of Minor Offenses,and the Law on Land and Mortgage Registers and Mortgage, published in Journal of Laws (Dziennik Ustaw) of 2000, No. 74, item 855.

Act on Specific Terms and Conditions of Consumer Sale and Amendments to the Civil Code.

II. Prohibited contractual provisions
Prohibited contractual provisions or “abusive clauses” are understood as provisions of the contract concluded with the consumer that were not agreed individually and in consequence shape consumer’s rights and obligations in a manner contrary to good customs and grossly violate consumer’s interests. Such provisions are not binding on the consumer, but the parties are bound by other provisions of the contract.

In accordance with the provisions of article 3853 of the Civil Code, if in doubt – it is considered that unlawful contractual provisions are those that, in particular:

exclude or seriously limit the liability to the consumer for failure to perform or improper performance of an obligation,

provide provisions, of which the consumer was unable to get acquaint with before concluding the contract,

impose solely on the consumer an obligation to pay a fixed sum in the case of the resignation from the conclusion or performance of the contract,

impose on the consumer, who has not performed the obligations or departed from the contract, the obligation to pay grossly inflated penalty or smart money,

exclude the jurisdiction of Polish courts or submit the matter to a Polish or foreign arbitration court, or other authority, and impose the adjudication by the court which is not locally relevant according to the Civil Code.

These are couple of examples of the so-called “gray abusive clauses”.

III. Procedure
The District Court in Warsaw, the Court of Competition and Consumer Protection decides if a given provision is prohibited and abusive. Anyone who has been or may be offered a contract containing such a clause, consumer organizations, consumer ombudsmen and the President of the Office of Competition and Consumer Protection may bring an action before the Court. Consumers may obtain assistance from the local consumer ombudsman or one of the state-funded consumer organizations.

The clauses which have been found abusive by a final decision of the Court are entered into the Register of Prohibited Clauses that is available on the website of the President of the Office of Competition and Consumer Protection and as of this moment cannot be used in relations with consumers. The application of such clauses may be regarded as an infringement of collective consumer interests and may result in a fine of up to 10% of the trader’s revenue.

The Act of 23 August 2007 on Combating Unfair Commercial Practices – CUCP – (in Polish: ustawa o przeciwdziałaniu nieuczciwym praktykom rynkowym) published in Journal of Laws (Dziennik Ustaw) No. 171, item 1206, came into force on 21 December 2007. It implemented the Directive 2005/29 of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450, Directives 97/7, 98/27 and 2002/65 of the European Parliament and of the Council and Regulation 2006/2004 of the European Parliament and of the Council (“Unfair Commercial Practices Directive”).

Among others things, it defines in article 5(1) misleading commercial practices as actions connected with introduction of products into the market which may lead to mistake as regards to products, its packaging, trade marks, trade names or other signs capable of identifying entrepreneurs, particularly comparative advertising.

The Act also deals with crypto-advertising which is defined as using commentary content in mass-media sources to promote a product where the business/entrepreneur paid for such action but it is not clearly indicated in the content, images or sounds and it is not easily identified by the consumer.

The Act also covers aggressive commercial practices. It defines such actions as (i) onerous processes which are not connected with consumers’ actions or (ii) desisting from acting, i.e. inducing the purchase of products via phone, fax, electronic mail or other means used to communicate in distance.

The Supreme Court in its judgment of 13 July 2006 case file III SZP 3/06 ruled that the application of standardized agreements which provisions are identical with the provisions deemed as prohibited contractual provisions (abusive clauses) by the District Court in Warsaw, the Court of Competition and Consumer Protection, and were entered into the register kept by the President of the Office of Competition and Consumer Protection, may be considered in relation to another undertaking as the practice detrimental to/infinging on the collective interests of consumers.